After years of political wrangling, the Durham County (N.C.) Commission voted unanimously last week to lease its 216-bed Durham Regional Hospital to the owner of its longtime competitor, Duke University, for the next 20 years.
The total lease agreement is worth $142 million.
The commissioners backed the agreement after a two-hour debate June 22, nine days before the deal was to go into effect.
The university, in Durham, N.C., will pay a total of $7.1 million a year to run the city's only other acute-care hospital. The university operates 888-bed Duke University Medical Center.
The annual fee includes a $3.5 million lease payment, $1.5 million in supplements for the county's ambulance service and $2.1 million to subsidize a community health center.
The two hospitals, which will control 100% of the acute-care beds in Durham, will not seek antitrust clearance from federal or state agencies because the deal is a lease arrangement, not a sale or joint venture, said Don Brady, a Durham Regional spokesman.
Duke will prepay the first 10 years' worth of lease payments, a total of $35 million, to the county July 1. The county commissioners will decide how to spend the money after this summer.
The 20-year lease features an option to renew the contract for another 14 years. The terms of the deal also include an "unwind" provision, which the parties can use to break the deal at any time, but "that would be unusual and would involve significant penalties," Brady said.
Duke also is trying to sew up other deals in the area. The school is buying 160-bed Raleigh Community Hospital from beleaguered Columbia/HCA Healthcare Corp. as part of a $1.2 billion deal to sell 22 hospitals to a consortium of not-for-profits (May 25, p. 2).
Duke expects the Raleigh Community sale, which will cost Duke $185 million, to close in August.
In another deal approved by its board this month, Duke is purchasing United Methodist Retirement Homes, which owns three facilities in Durham, Lumberton and Greenville. United Methodist also is buying a 167-unit home in Pinehurst and is building a 500-unit facility in Durham. Duke will take control of those as part of the deal.
The purchase price was not disclosed.